CBDCs are steeped in human rights abuses and are a new way to track citizens

Central Bank Digital Currencies (“CBDCs”) have the potential to radically transform the financial system, and all signs point to that transformation being a detriment to citizens around the globe.  There are multiple human rights concerns surrounding their implementation and use.

Many people regularly use multiple forms of digital money.  We make digital payments using credit, debit, and prepaid cards, as well as mobile payment apps like PayPal.

It’s not just payments that have gone digital. Nearly every financial institution offers services – from savings accounts to mortgages – via mobile applications.

So, money is already widely available in digital form. The current system works so well that few people ever take the time to worry about whether the digital money they are using is a liability of, for example, Visa or a liability of their bank.

So why are governments considering implementing CBDCs?

Unlike the current system of digital money, with CBDCs, digital money would be a liability of the central bank. In other words, governments have the direct responsibility to hold, transfer or otherwise remit those funds to the ostensible owner. This feature creates a direct link between citizens and the central bank. And it is this feature that opens the door to so many human rights concerns when it comes to the adoption of CBDCs.

These concerns cover issues of financial privacy, freedom, stability and cybersecurity.  The Human Rights Foundation’s (“HRF’s”) CBDC Tracker website notes the following as the concerns regarding CBDCs:

• Sweeping financial surveillance. Around the world, governments routinely pressure banks and other financial institutions to supply customer information. From Canada to Russia, this practice has become all too common. The difference between what is experienced today and what would be experienced with a CBDC, however, is that the financial records would be on government databases by default. In other words, a CBDC could spell doom for what little protection remains because it would give governments complete visibility into every financial transaction.
• Restricting financial activity.
• Freezing funds.
• Seizing funds.
• Imposing negative interest rates.  Proposals for CBDCs often tout negative interest rates as a benefit because it would offer policymakers “greater control” over the economy. For citizens, however, a negative interest rate amounts to a fine or tax for saving money.
• Disrupting financial stability.
• Disrupting cryptocurrency.  Globally, governments have demonstrated that they want a CBDC specifically to hold on to their monopoly over national currencies. For instance, China banned cryptocurrencies just as its CBDC was launched; India announced its plans for a CBDC while simultaneously calling for a ban on cryptocurrency; and Nigeria prohibited banks from cryptocurrency transactions just as it launched its CBDC.
• Putting the economy at risk of cyberattacks.
• Creating a new tool for corruption.

For additional information on concerns regarding the risks of CBDCs, HRF recommends the Cato Institute’s webpage titled ‘The Risks of CBDCs: Why Central Bank Digital Currencies Shouldn’t Be Adopted’ and report titled ‘Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths’.